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Bankrupt Grant Family Farms had owed nearly $10 million

FILE -- "Americauna" hens take cover from the heat underneath and inside one of several "roving chicken busses" that serve as hen houses at Grant Family Farms in Wellington on Aug. 27, 2010. (Andy Cross, The Denver Post)

FILE -- "Americauna" hens take cover from the heat underneath and inside one of several "roving chicken busses" that serve as hen houses at Grant Family Farms in Wellington on Aug. 27, 2010. (Andy Cross, The Denver Post)

Bankrupt Grant Family Farms was awash in nearly $6.9 million of debt and another $3 million in liabilities when it filed for liquidation last month, according to records filed Wednesday.

Meanwhile, farm owner Andrew Grant is embroiled in a controversy over the slaughter of 5,000 organic chickens he raised, in part due to the farm's financial troubles.

Though the farm claims annual revenues of about $11.6 million, it holds just $3.7 million in assets, the bulk of it in dispensable crops, paperwork shows.

In what is the first detailed look into the farm's finances since its last bankruptcy six years ago, the operation faced a crushing load of debt that ranged from a $64 bar tab to millions of dollars in loans designed to keep it afloat.

At least one employee filed a wage claim for $59,000. Grant is listed as a creditor as well — for $295,000 in deferred wages.

"This is the hardest thing I've ever had to do," Grant said about the bankruptcy on Wednesday. "It's just not right what happened here."

Grant said his financial troubles got worse — this is the farm's third bankruptcy — last year when he accepted a $1.5 million loan from Localization Partners in order to stay afloat.

Now its largest secured creditor, LP is a consortium of about 20 investors who say their loan saved the farm's Community-Supported Agriculture program.

Grant says LP's real purpose was to wrestle the farm from him. LP investors have said they intend to have an ownership interest in whatever farm operation emerges from bankruptcy.

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Among its largest creditors is farm founder Lewis Grant, Andrew's father, who is still owed about $384,000, presumably on loans, and another $672,000 for "business debt."

Another $404,000 is owed to S&C Organics, which is owned my Bushman Organic Farms in Iowa.

Several other debts include unpaid personal loans, including $558,000 from Grant's close friend, Michael Bartolementi, and $490,600 from Nick DiGiorgio, another close friend.

The three men are listed in the documents as living at the same address.

Along with the LP loan, Grant farms owed $1.2 million to Colorado Community Bank and also has an outstanding $1.2 million loan from the federal Small Business Administration.

It had been unclear until now how much debt the failed community-supported farm had. Federal and state tax liens tally past $2 million, according to filings with state agencies. The Colorado Department of Revenue on Wednesday filed its claim in the bankruptcy case, only the second of what's expected to be many claims against the business. Documents in the bankruptcy indicate Grant owes state revenue officials as much as $224,000.

The farm also owes the IRS as much as $2 million in back withholding taxes — Grant says it's closer to $1 million, though filings with the Colorado Secretary of State indicate otherwise — a claim not yet filed. Grant, too, was levied with more than $500,000 in unpaid taxes by the IRS, all of it business wage claims dating to 2005 the IRS says Grant was responsible for withholding. Federal law allows the IRS to levy claims for unpaid corporate taxes on the individual responsible for paying them.

The farm ran the nation's largest Community-Supported Agriculture program, where people pay to cover a portion of the expense to raise crops, then later are given a share of the harvest.

The farm had been borrowing money just to buy seed, according to one lawsuit filed by a farmer near the Wellington-based Grant farm. Schnoor Farms had fronted the costs of seed purchases, acting as a middleman for Grant because it couldn't buy the seed on its own.

The lawsuit in Larimer County District Court does not explain why Grant had to buy seed in this manner, only that Schnoor agreed to buy the seed on Grant's behalf from 2009-2010, then sell it to Grant at that cost. The lawsuit claims Grant owes Schnoor more than $26,000 for those purchases.

Andrew Grant has said the farm's financial problems hinged on a number of issues, particularly poor weather, a nationwide spinach recall that affected demand and an inability to obtain crop insurance.

Others say the farm was simply managed poorly and it had grown larger than Grant was able to handle.

One creditor is Six Dog Investments, which is listed at Grant's home address in Wellington and is owned by DiGiorgio. It is owed $34,000 — purportedly for the sale of eggs from about 15,000 chickens the investment group owns or owned.

The organic chickens have been the center of local controversy, mostly because Grant said he was forced to slaughter 5,000 of them and bury their carcasses.

The reason, he said, was because LP — which controlled the farm operations and the sale of the chickens' eggs — failed to pay Six Dog the $34,000 from egg sales. Many of the eggs were sold to CSA buyers.

In a number of emails Grant shared with The Denver Post, he told LP principals in December about the lack of feed for the chickens and the likelihood of having to cull the flock.

"We are in need of feed, and if these funds aren't forwarded I will need to begin immediately destroying these chickens rather than let them starve," Grant wrote in one email.

Slaughtering them allowed the remaining 10,000 birds to be fed "another three weeks," he said. A chicken will eat about ¼ pound of food daily, he said.

Grant said he reduced the flock by about 6,000 more, selling them to operations as varied as Asian restaurants and local eateries, for $1 a bird.

Michael Brownlee of Transition Colorado, which holds LP, has said Grant's blame was misplaced.

Some others were sold in piecemeal or adopted through a local program that seeks homes for the older birds, which can still lay eggs for their owners. Fort Collins is one city whose ordinances allow for urban homeowners to keep a small number of live birds.

The remaining birds are Grant's latest focus at farming. He wants to sell the organic eggs on the open market.

"But we need to feed them," he said.

Local efforts are underway to garner funds or direct donations for the feed. Others have stepped up to give the chickens a home.

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